4 Law and Grace

The key text on this subject is the promise made in Deuteronomy 15:15-19. Christ perfectly fulfills that prophecy. He is the promised prophet who would replace Moses in his role of prophet and lawgiver. Christ would “be like” Moses in some ways and very unlike Moses in other ways. The major difference is the authority of Christ to speak with the personal authority of God the Son. Moses, and all other prophets, must say, “Thus saith the Lord,” but our Lord alone can say, “But I say unto you.” 

The whole subject of the relationship of law and grace is involved in understanding the fulfillment of the prophecy of Deuteronomy 15:15-19. A short review of God using Moses as a mediator in establishing the old covenant with the children of Israel at Mount Sinai will not only help us understand Christ as our New Covenant Prophet, but it will also help in understanding the larger issue of law and grace. It is essential that we have a clear understanding of the radical difference between the covenant God made with Abraham and the covenant he made with the children of Israel at Mount Sinai. This will involve seeing exactly how Jacob’s (Israel) children become the covenant nation of God and how Moses became that nation’s Lawgiver.

First, we must distinguish between Israel as a nation, or body politic, and the children of Israel as merely the children of Jacob. The terms “children of Israel” and “nation of Israel” will become synonymous but they did not begin that way. Jacob’s children were not a nation—a body politic—prior to God entering into a special and specific covenant with them at Mount Sinai. They were not a nation—a body politic—when Joseph brought them down to Egypt nor did they become a nation while in Egypt. The children of Jacob became a nation at Mount Sinai. It was there that Jacob’s children officially became a nation or a body politic. Up to that point in time the children of Israel were not yet constituted a nation or body politic, they were merely the children of Jacob (Israel). Abraham never became a physical nation even though he was the grandfather of Jacob, the man who became the father of the nation. Neither Abraham, Isaac, nor Jacob was a prophet, priest or king. The three offices of prophet, priest and king are associated with the nation of Israel and her covenant with God. The covenant at Sinai that constituted Israel as a nation is not the same as the covenant with Abraham.

The first use of the word “nation” in Scripture is God’s promise to Abraham. 

The Lord had said to Abram, “Leave your country, your people and your father’s household and go to the land I will show you. 

“I will make you into a great nation

and I will bless you;

I will make your name great,

and you will be a blessing (Gen.12:1-2).

God promised Abraham that he would not only have a seed, he would become the father of many nations. His son Isaac, born to Sarah, would be the seed line that would bring forth the Messiah. His grandson Jacob would not only become a great physical nation, he would also become the spiritual seed that constitutes the spiritual nation, the true church of Christ. Ishmael, Abram’s son by Hagar, Sarah’s handmaid, would also become a great nation[1] but would not in any sense be a spiritual nation as was Jacob (Israel). Hagar mothered a true son to Abraham named Ishmael but both mother and child were “cast out” without receiving the inheritance (Gen. 21:10, cf. Gal. 4:30). 

The first use of the word “Israel” in Scripture is when God changed Jacob’s name from Jacob to “Israel.” 

… “Your name will no longer be Jacob, but Israel, … (Gen 32:28).

The children of Israel, as a people, are promised by God at Mount Sinai that if they would obey the covenant he was about to make with them, they would become a holy and special nation, a body politic, bound by special covenant to God. God proceeds to enter into this special covenant with the children of Israel at Mount Sinai in Exodus 20.

In the third month after the Israelites left Egypt — on the very day — they came to the Desert of Sinai. After they set out from Rephidim, they entered the Desert of Sinai, and Israel camped there in the desert in front of the mountain. 

Then Moses went up to God, and the Lord called to him from the mountain and said, “This is what you are to say to the house of Jacob and what you are to tell the people of Israel: ‘You yourselves have seen what I did to Egypt, and how I carried you on eagles’ wings and brought you to myself. Now if you obey me fully and keep my covenant, then out of all nations you will be my treasured possession. Although the whole earth is mine, you will be for me a kingdom of priests and a holy nation.’ These are the words you are to speak to the Israelites” (Ex. 19:1-6).

Israel never became the promised spiritual holy nation simply because she never kept the covenant terms. Exodus 19:4-6 is totally misunderstood by covenant theologians. Their typical interpretation of these verses is this: Exodus 19:4-6 is the preamble to the covenant. In verse 4, God reminds the Israelites that they are a redeemed people “under grace.” Covenant Theology insists that the covenant at Sinai was a gracious covenant made with a “redeemed” by which they mean “justified” people. It totally ignores the big “if” and the “then” in verse 5.[2] They fail to see the covenant at Sinai was a conditional covenant. Israel was indeed a people redeemed by blood, but it was not spiritual redemption by Christ’s blood. It was a physical redemption from Egypt by animal blood. Israel becoming a “kingdom of priests” and a “holy nation” was totally dependent upon their keeping the covenant terms of Exodus 20, which they never did. The covenant at Sinai was without question a legal covenant of works conditioned on Israel’s obedience to the covenant terms. The words “if you will obey” and “then I will” cannot be made to mean “I will whether you do or not.” The covenant at Sinai was without question a conditional covenant. Language cannot be more explicit. God said, “If you obey me fully and keep my covenant, then [and only then] … you will be for me a kingdom of priests and a holy nation.” They did become a “holy”[3] (meaning separate) physical nation, but they did not become a “holy,” (meaning spiritual) nation where all of the members in the nation were regenerate saints. Failing to see this is one of the tragic mistakes of covenant theologians. They totally fail to see the relationship of the old and new Covenants. They read a new covenant meaning of the great redemptive words back into the old covenant nation of Israel. 

Israel, as a nation, was loved as no other nation, but it was not the same redemptive love with which Christ loved the Church. Israel, as a nation, was sovereignly chosen to be God’s people but that choice, or election, was not the same as the Church being chosen unto everlasting life. Israel, as a nation was called out of bondage to Egypt but that is not the same as the spiritual calling (regeneration) that effectually calls us out of bondage to sin and unites us to Christ. Israel, as a nation, was redeemed by blood, but it was the blood of an animal not the blood of Christ. It was physical redemption not spiritual redemption.

It is a grievous error to treat the redemptive words “loved, chosen, called and redeemed” the same when applied to Israel as a nation as they are when they are used of the church. Every single Israelite could say, “God loved me with a special love and sovereignly chose me. He redeemed me with a blood sacrifice and called me out of Egypt.” Every Israelite could say all of those things and still be as lost as the Devil simply because all of those things were physical and applied only to physical Israel. Every member of the body of Christ can say all of those things in the certainty that they are saved and eternally secure in Christ. The one thing every new covenant believer can add to that list of things is, “I am justified.” Very few Israelites could add, “I am justified.” Hebrews 3:8-11 and 4:1-2 describe the same people who were “loved, chosen, called and redeemed” in the nation of Israel. Israel was a type of the church but must never be treated as the true redeemed justified people of God. Not a single person who is “loved, chosen, called and redeemed” in the new covenant meaning of those words was ever lost. Most of the physical nation of Israel that was “loved, chosen, called and redeemed” was lost.

The whole subject of the nature of the covenant at Sinai needs to be examined in another book, but my main concern here is to show that Israel’s nationhood began at Sinai and was based on a covenant of works. Israel never received the blessings promised in that covenant and was disowned as a nation when they crucified their Messiah. The church, including saved Jews and Gentiles, has received the specific blessings promised in Exodus 19:4-6 (see 1 Peter 2:5-10). The church is the true holy nation, God’s peculiar possession, and all her members are regenerate priests. 

Let us compare the covenant God made with Abraham and his seed with the covenant he made with the children of Israel at Mount Sinai. In one sense, God’s covenant with Abraham included all of his seed, but in another sense his seed only included Jacob and his children. Ishmael, the father of the Arabs, was just as much a true son of Abraham as was Isaac. Ishmael is called Abraham’s son, and he was circumcised on the same day that Abraham was circumcised. Abraham and his son Ishmael were both circumcised on that same day. (Gen. 17:26). Ishmael was promised every specific blessing, except being in the seed line for the Messiah, that Isaac was given. And as for Ishmael, I have heard you: I will surely bless him; I will make him fruitful and will greatly increase his numbers. He will be the father of twelve rulers, and I will make him into a great nation (Gen. 17:20). Ishmael was Abraham’s true son just as much as was Isaac. Ishmael was Abraham’s true physical seed but not his spiritual seed. Scripture is very explicit on this point. 

As I mentioned, Abraham was not a prophet, a priest or a king. Those three offices were instituted in the nation of Israel and were fulfilled in the church. All three offices are clearly types of Christ. Dispensationalism sees Christ in the priestly work of Aaron, especially in his tabernacle ministry. The Plymouth Brethren have given us some of the most Christ exalting studies in their messages on Aaron’s ministry in and for the church that you will ever read. I have spent many delightful hours with Charles Henry Mackintosh, Ironside and their kinsmen. Likewise, these men have no trouble seeing Moses as “that prophet” as a clear type of Christ fulfilled in the Gospels; however, when they come to the prophets all they can see is the Jews inheriting the land in a future millennium. Israel is not a type of the true people of God in dispensationalism; they are the true people of God. 

Dispensationalism believes the church is a parenthesis in God’s eternal purposes. Israel has been likened to a train that has been taken off the main line and placed on a sidetrack. The church is presently on the main track. At the second coming of Christ, the church will be raptured, and the Jews will again be on the main track. At that time God will once again take up special dealings with Israel and will fulfill his promises concerning the promised kingdom. The kingdom promised to Israel in the Old Testament was offered to them by Christ at his first coming, but they rejected him as the promised Messiah. The kingdom was “postponed” until the second coming. 

One of the synonyms for the word parenthesis is “afterthought’ and another one is “digression.” Dispensationalism sees the purpose of God made known and worked out in his dealings with the nation of Israel. It is believed that our Lord came to establish the Kingdom of God on earth with the Jewish nation being the head of all the nations. Christ would rule on David’s throne. Jerusalem would be the capital of the world. Older dispensationalism believes the temple described in Ezekiel 40–47 will be rebuilt, and both the Aaronic priesthood and the sacrifices will be revived. 

Early dispensationalism also insisted that there were two new covenants, one for Israel and one for the church. They believed the new covenant in Hebrews was made with Israel. If this covenant included the Gentiles, it was felt it would weaken premillennialism. Progressive dispensationalism, a recent modification of dispensationalism, insists, on the grounds of Hebrews, that the new covenant was not only made with Israel, but also included the church. Some dispensationalists, and also some non-dispensationalists, feel that the Progressives are inconsistent and should not call themselves dispensationalists. I do not agree with either the early or the progressive dispensationalists. It is quite clear to me that the new covenant was not in any sense made with Israel; it was made with the church. It was made with the people for whom Christ died; it was made to replace the old covenant; and it was to be remembered by the church in this gospel age (1 Cor. 11:23-26). 

Jewish believers living in the gospel age are part of the group redeemed body of Christ. Christ is their Prophet; Priest and King, just as he is my Prophet, Priest and King. There is not a Prophet, Priest and King for saved Jews and another Prophet, Priest and King for the church. We simply must understand that when Christ fulfilled the Old Testament promises of the new covenant, all the distinctions between Jew and Gentile were forever abolished. There was a very clear difference between Jew and Gentile under the Old Covenant, but all of those distinctions are done away in Christ.

Two things happened with the coming of the Holy Spirit on the Day of Pentecost. First, the believing Gentiles, by being baptized into the body of Christ, were raised to a place of absolute equality with the believing Jews (cf. Gal. 3:26-29). Second, the unbelieving Jew was lowered to a place of absolute equality with the “Gentile dog.”

There is one story line in the Bible. It begins in Genesis 1:1 with God as Creator. When sin entered the world, the story line announced God’s response and goal. God’s goal was to choose an “election of grace” from among the sinful children of Adam. A coming Redeemer is promised who will undo what Satan did. He is called “the seed of the woman.” The Scripture from Genesis 3:15 sets forth God’s reaching his goal and saving the sinners he sovereignly chose. The story line tells of a man named Abraham being sovereignly called by God to be the father of the seed line that will finally bring forth the promised seed of the woman. Abraham’s great grandchildren, the children of Jacob, wind up in Egypt in slavery to Pharaoh and the Egyptians. God remembers his covenant with Abraham and sends a man named Moses to deliver the sons of Jacob from their bondage to the Egyptians.

At this point the story line on the surface seems to either end or be put on the shelf temporally, and a new story line seems to begin. In this case, the appearance is wrong. God enters into a special and specific covenant at Sinai. The terms of this covenant made at Sinai with Moses as the Mediator was different in nature from the covenant made with Abraham. The children of Israel become a theocratic nation and are promised that if they will obey his covenant made with them at Sinai, they would receive the following blessings. They would be a “peculiar treasure,” “kingdom of priests” and a “holy nation.” When the people are confronted with the covenant terms, they unanimously agree to keep the covenant terms. 

Now if you obey me fully and keep my covenant, then out of all nations you will be my treasured possession. Although the whole earth is mine, you will be for me a kingdom of priests and a holy nation.’ These are the words you are to speak to the Israelites.” 

So Moses went back and summoned the elders of the people and set before them all the words the Lord had commanded him to speak. The people all responded together, “We will do everything the Lord has said.” So Moses brought their answer back to the Lord (Ex. 19).

How radically different are the terms of the covenant made with Israel at Sinai and the covenant made with Abraham. John Stott has given an excellent summary of the difference between the religion of Abraham and the religion of Moses.

God’s dealings with Abraham and Moses were based on two different principles. To Abraham He gave a promise (‘I will show you a land … I will bless you …’, Gen. 12:1- 2). But to Moses he gave the law, summarized in the Ten Commandments. ‘These two things (as I do often repeat),’ comments Luther, ‘to wit, the law and the promise, must be diligently distinguished. For in time, in place, and in person, and generally in all other circumstances, they are separate as far asunder as heaven and earth …’ Again, ‘unless the Gospel be plainly discerned from the law, the true Christian doctrine cannot be kept sound and uncorrupt.’ What is the difference between them? In the promise to Abraham God said, ‘I will … I will … I will’. But in the law of Moses God said, ‘Thou shalt … thou shalt not …’. The promise sets forth a religion of God −God’s plan, God’s grace, God’s initiative. But the law sets forth a religion of man–man’s duty, man’s works, and man’s responsibility. The promise (standing for the grace of God) had only to be believed. But the law (standing for the works of men) had to be obeyed. God’s dealings with Abraham were in the category of ‘promise,’ ‘grace’ and ‘faith’. But God’s dealing with Moses was in the category of ‘law,’ ‘commandments’ and ‘works.’[4]

We have been insisting there is only one story line and one ultimate goal of redemption in Scripture, and now we are saying the religion of Moses and the religion of Abraham are different. The nature of the Abrahamic covenant and the nature of the Mosaic covenant are indeed radically different, but both covenants serve the same goal and are part of the same story line. Israel’s brash response of assurance that they could keep the terms of the covenant given at Sinai shows how self-righteous they were. They should have said, “Lord, that is a good and fair covenant, and you have every right to demand its terms of perfect obedience. However, you know and we know that we cannot keep those terms, and we will be dead before the sun goes down.” The Mosaic covenant was designed by God to kill all hope of salvation by works and push the sinner to faith in the faith/grace covenant made with Abraham. The Abrahamic covenant was permanent, and the Mosaic covenant was temporary. The law was in force “until the seed of Abraham, the Messiah, came” (Gal 3:19). 

The dispensationalist is correct in asserting that there is a parenthesis in Scripture. They just have the parenthesis around the wrong time, wrong place and wrong people. The nation of Israel is the parenthesis- “Long ago, at many times and in many ways, God spoke to our fathers by the prophets …” (Heb. 1:1). In contrast the nature of the church is not parenthetical, “but in these last days he has spoken to us by his Son” (Heb. 1:2) and, “This is my beloved Son, with whom I am well pleased; listen to him” [for he is a prophet superior to Moses and Elijah] (Matt.17:5b).


  1. For a study of Abraham’s seeds see my Abraham’s Four Seeds (Frederick, MD: New Covenant Media, 1998).
  2. Exodus 19:5: If you obey. Compare 1 Pet. 2:9; Rev. 1:6; Rev. 5:10. What under law was conditional is, under grace, freely given to every believer. The “if” of verse 5 is the essence of law as a method of divine dealing, and the fundamental reason why the law “made nothing perfect” (Heb. 7:18, 19; compare Rom. 8:3). To Abraham the promise preceded the requirement; at Sinai the requirement preceded the promise. In the New Covenant the Abrahamic order is followed. See Hebrews. 8:8-12. Scofield Reference Bible, (New York: Oxford University Press, 2003), 113.
  3. The word “holy” means separated unto God. Israel was separated from all other nations, and belonged exclusively to God as a nation. Unfortunately very few Israelites were ever “holy” in the sense of being sanctified unto God in personal salvation. “Holy” does not always mean moral purity.
  4. 4 John R.W. Stott, The Message of Galatians, (Leicester, England: Inter-Varsity Press, 1968), 86-87. The passages from Luther which Stott quotes are from Luther’s Commentary on the Epistle to the Galatians published by James Clark